By C. S. Kelkar Partner C. S. Kelkar & Associates, Company Secretaries

Exemptions provided by the Companies Amendment Act, 2015 Minimum paid-up capital requirement withdrawn Section – 11 relating to Commencement of Business omitted. Common Seal is optional Related Party transactions can be approved by passing Ordinary Resolution. Special Resolution not required. before declaring dividend for the year, previous year(s) losses and depreciation not provided in earlier years should be set off against profits of current year.

MCA has come out with a Notification dated which exempts Private Companies from certain provisions of Companies Act, 2013

Exemptions Given Section of the Act Exemptions GivenMajor Impact Section 2(76) Section 2(76)(viii) shall not apply with respect to Section 188. Definition of Related Party relaxed with respect to Related Party Transactions Now, the definition does not include Holding, Subsidiary, Associate Company and Fellow Subsidiaries Transactions entered with Holding, Subsidiary, Associate Company and Fellow-Subsidiaries falling under section 188 does not require compliance of section 188. Note:- Although Holding Company is excluded but Directors (other than independent Director), KMPs of Holding Company or their relatives are still included in definition of Related Party. (Section 2(76)(ix))

Exemptions Given Section of the Act Exemptions GivenMajor Impact Section 43 & 47 Shall not apply to Company Section 43 relating to Kinds of Share Capital and Section 47 relating to Voting Rights shall not apply to a Private Company. Specific provision in the Memorandum & Articles of association required. Private Companies can have different types of Shares Capital – Other than Equity and Preference. Hybrid Instrument is possible with different dividend rate, voting rights etc. One Share need not carry One Vote.

Exemptions Given Section of the Act Exemptions GivenMajor Impact Section 62 (1)(a)(i) & 62(2) TIME LIMITS IN RIGHT ISSUE CAN BE REDUCED sending of offer letter min 3 days period before opening of offer AND Minimum & maximum offer period of 15 & 30 days respectively Can be reduced, if 90% of the members give their consent in writing / electronic mode In case of emergency, the mentioned time limits can be reduced with consent of 90% shareholders. Note:- The time limits cannot be increased, they can only be reduced.

Exemptions Given Section of the Act Exemptions GivenMajor Impact Section 62 (1) (b) Words ”Special Resolution” to be substituted with "Ordinary Resolution“. ESOP Scheme can be approved by passing Ordinary Resolution.

Exemptions Given Section of the Act Exemptions GivenMajor Impact Section 67 Provisions related to restriction on purchase of own shares by Company shall not apply to Private Companies a)In whose share capital no other body corporate has invested any money b)If the borrowing of such a company from banks / financial institutions / body corporate is less than twice its paid up capital or 50 Crores whichever is less c)Such company has not defaulted in repayment of such borrowing subsisting on the date of transaction The Companies fulfilling the criteria mentioned here, can buy its own shares and also can provide loan to purchase its own shares. Note: Investment by a body corporate, even in one equity share, will disqualify a private company from availing this exemption.

Exemptions Given Section of the Act Exemptions GivenMajor Impact Section 73(2) (a) to (e) Acceptance of deposits from members made easier for certain private companies Private Companies borrowing monies from members up to aggregate limit of paid-up share capital & free-reserves are not required to comply with conditions mentioned in section 73(2)(a) to (e). However details of money so borrowed shall be filed with ROC in manner as may be specified If Such Company borrows money from member then, it need not Issue Circular File circular with ROC Maintain deposit repayment reserve Provide deposit insurance Credit rating not required Note: Approval of members by way of “Ordinary Resolution” is required to accept deposit from members.

Exemptions Given Section of the Act Exemptions GivenMajor Impact Section 101 to 107 & 109 Articles of a private company may override provisions pertaining to Content & length of notice Explanatory Statement Quorum Chairman Proxies Restriction on voting rights Show of hands & Poll (Position brought at par with Companies Act, 1956) Specific provisions in the Articles of Association required to give overriding effect. Note: Such overriding provisions in the Articles of Association will override Secretarial Standards as well.

Exemptions Given Section of the Act Exemptions GivenMajor Impact Section 117(3)(g) Shall not apply Any Board resolution mentioned in section 179(3)(g) read with rule 8 of Companies (Meeting of Board & its power) Rules, 2014 is now not required to be filed with ROC in Form MGT 14. E.g. resolutions to borrow, to invest, approving balance sheet /directors report, to note disclosure of interest by directors, to appoint internal auditor, to issue shares etc. not required to be filed with ROC.

Exemptions Given Section of the Act Exemptions GivenMajor Impact Section 141(3)(g) Shall apply with the modification that the words “Other than OPC, Dormant, Small Companies and Private Companies having paid up capital of less than Rs. 100 Crores shall be inserted after 20 Companies.” Shall be inserted after the words twenty companies Limit of 20 Companies only includes:- Public Companies Private Companies having paid up capital of Rs. 100 crore or more

Exemptions Given Section of the Act Exemptions GivenMajor Impact Section 160 Shall not apply to Private Company. Amount of Rs. 1 lakh not required to be deposited at least 14 days before GM. Note: 14 days notice is required u/s 111 of the Act.

Exemptions Given Section of the Act Exemptions GivenMajor Impact Section 162 Shall not apply to Private Company. More than 1 director can be appointed via single resolution

Exemptions Given Section of the Act Exemptions GivenMajor Impact Section 184(2) Shall apply with the exception that The interested director can participate in such meeting after disclosure of interest Interested Director can now participate in agenda in which he is interested. Poser – can he be counted in Quorum (Section 174(3)

Exemptions Given Section of the Act Exemptions GivenMajor Impact Section 185 Shall not apply to Private Companies a)In whose share capital no other body corporate has invested any money b)If the borrowing of such a company from banks / financial institutions / body corporate is less than twice its paid up capital or 50 Crores whichever is less c)Such company has not defaulted in repayment of such borrowing subsisting on the date of transaction Giving of loans/ guarantee/security to directors, relatives of directors, group companies is now possible

Exemptions Given Section of the Act Exemptions GivenMajor Impact 2 nd Proviso to Section 188(1) Restriction on voting right in general meeting in case of related party transaction not applicable A member although being a related party to the concerned resolution can still cast his vote at GM.

Exemptions Given Section of the Act Exemptions GivenMajor Impact 196(4) &(5) Shareholder’s ratification not required for appointment of MD/WTD Shareholder’s Ratification not required Schedule V not applicable. A Foreign National can be appointed as MD / WTD without CG approval MR-1 not required to be filed T&C of appointment, remuneration not mandatory to be mentioned in resolution

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